India initiates another anti-dumping investigation on solar cells and modules

India has initiated a new investigation to probe dumping of solar cells and modules from China, Taiwan and Malaysia. The petition for this investigation was submitted by Indian Solar Manufacturers Association (ISMA) on behalf of Indosolar, Websol and Jupiter Solar. The investigation covers both crystalline and thin-film technologies and will affect all imports making up more than 85% of total cell and module sales in India.

Proving dumping for solar imports should be relatively easy as Chinese suppliers have been selling modules in India at prices lower than in China;

The investigation provides a great test case for design of Indian policy making as there is no evidence from other countries of protectionist duties benefitting the prospects of domestic manufacturers;

But with solar capacity addition growing at 100% CAGR in last 3 years and cost of solar power crashing to INR 2.44/kWh, we feel that the government may be more sympathetic to the demands of domestic manufacturers this time;

Dumping is defined as exporting a product at a price that is lower than the domestic price for the same product. For solar imports, proving dumping may not be difficult as it is common knowledge that Chinese suppliers have been selling modules in India at prices lower than in China.

The latest petition follows an earlier probe in 2012-14 on dumping of solar cells and modules, which had recommended anti-dumping duties of USD 0.11-0.81/Wp on cells and modules imported from China, US, Malaysia and Taiwan. However, the Indian government decided not to act on this recommendation following intervention by the then newly appointed Minister for Power, Piyush Goyal as the duties were seen detrimental to the growth prospects of solar industry in India. Instead, domestic manufacturers were promised assured demand through a Domestic Content Requirement (DCR) regime. Loss in the case against DCR at WTO has brought events full circle back to anti-dumping duties.

The dumping investigation will be carried out by Directorate General of Anti-Dumping and Allied Duties (DGAD), who will consider a 15-month period from Apr-16 to Jun-17 to probe dumping and three-year financial data of the petitioning companies to analyse injury to domestic manufacturers. All other affected parties have a period of 40 days to share their response to the domestic industry’s application. While the investigation can take 12 to 18 months, a provisional duty can be announced as early as on 22 September, 60 days after commencement of the investigation. This coincidentally is the same date when the USA is expected to decide on a safeguard duty petition from Suniva.

ISMA has submitted a separate parallel petition to Directorate General of Safeguards to consider imposition of safeguard duty on solar cells and modules. Safeguard duty is defined as temporary measure in defense of the domestic industry which is injured or has potential threat of injury due to sudden surge in imports. Unlike anti-dumping duty, a safeguard duty is country agnostic, is imposed on all imports and can be implemented much faster. In a recent precedent, India imposed safeguard duty of 10 per cent on import of specified steel products.

As we have always maintained, we see little upside to imposition of anti-dumping or safeguard duties on solar cells and modules. There is no evidence from other countries of such duties resulting in any long-lasting benefits for domestic manufacturers. At the same time, any duties raise the risk of side-tracking India’s solar capacity addition target affecting more than 10,000 MW of project pipeline.

Unlike last time around, however, we believe that there is more sympathy within government for imposition of anti-dumping and/or safeguard duties. In our previous commentary, we had highlighted that with cost of solar power crashing to INR 2.44/kWh, there is a risk that the government may be tempted into a knee-jerk decision to protect domestic manufacturers at the cost of causing disruption in the solar market.

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